By Seth Sutel
The Associated Press

NEW YORK - Viacom Inc., the media conglomerate that owns MTV and CBS, is getting rid of its controlling stake in the Blockbuster video rental chain and taking a $1.3 billion charge to reflect the declining value of the business. The charge put Viacom well into the red for its latest fiscal quarter.

Ironically, the reason Viacom originally bought Blockbuster 10 years ago was for the large amounts of money it made, which Viacom needed at the time to finance its bid for Paramount in a heated takeover battle against rival suitor QVC.

Blockbuster still makes money, but its revenues are declining and investors are worried about its prospects given that giant retailers such as Wal-Mart Stores Inc. are flooding the market with cheap DVDs for sale. The video rental business is also facing challenges from emerging technologies such as video-on-demand, personal recording devices like TiVo, and even the DVD rent-by-mail service offered by Netflix Inc.

In making its announcement about Blockbuster on Tuesday, which coincided with its fourth-quarter earnings report, Viacom noted that the decision was not final, and it did not disclose details of the proposed transaction. Leaving the door open to potential bidders, the company said it would "continue to consider other alternatives."

Viacom took the $1.3 billion charge under an accounting rule that requires companies to occasionally assess the value of the goodwill of its businesses, or the amount above their current value that the company paid for them.

Including the Blockbuster charge, Viacom reported a net loss of $385.4 million in the fourth quarter, or 22 cents a share, compared with earnings of $652.4 million, or 37 cents a share, in the same period a year ago.

Revenues increased 11 percent to $7.52 billion from $6.78 billion.

In the earnings report, Viacom gave the latest indication of Blockbuster's struggles, reporting that same-store revenues fell 7 percent in the fourth quarter because of overall softness in the movie rental industry.